Loan: 7 Mistakes That Businesses Make When Making Money

Loan: 7 Mistakes That Businesses Make When Making Money

Even the most experienced companies can make a few mistakes when hiring a loan. Learn from the mistakes of others and get ready to make a good business. http://elevagemettey.com for more.

Loans are part of the reality of many companies as they are important to sustain or expand business. From its inception to the consolidation of large corporations.

Although they are familiar with credit operations, some entrepreneurs make mistakes that can do more harm than contributing to the company’s finances.

Here’s what are the top mistakes and get ready to make a good deal.

Close it directly with your bank without considering other alternatives

Choose wrong mode

Order less than necessary

Compare Interest Rates Only

Do not set resource target

Do not worry about formalizing the loan

Do not update budget forecasts

Close it directly with your bank without considering other alternatives

It was the time when it was only possible to get a loan with a large bank, in which you were a longtime customer. With the portability of credit and the arrival of startups, the market became much more diverse.

Nowadays, there are many options, including financial institutions specializing in business loans. Most of them offer online service.

It is worth consulting and comparing, as rates and conditions vary greatly between them. To facilitate use a credit comparator , a digital platform that does this market research for you. Just register to get access to personalized offers.

Choose the wrong mode

In the same way that there are many financial institutions, there are also several loan modalities. Each one with its own payment characteristics and conditions.

This means that there is a way to solve specific challenges for each company. Some are even subsidized and have competitive rates.

To find the ideal option, it is necessary to evaluate the size of the company, the sector, the financial situation, the possibility of presenting guarantees, among other things.

Order less than necessary

Before hiring any type of loan, the first thing to do is a detailed analysis of the financial situation to find out how much you actually need.

It is no use making a loan to refinance expensive debts, if the cashier will be totally committed to paying the installments, leaving the company without working capital.

In this type of situation, it may be interesting to contract a higher amount to cover the costs of the operation until the inflow of a receivable stabilizes the cash flow.

Compare Interest Rates Only

At the time of making a loan, most people are aware of the approved amount and interest rates. This is certainly very important, but there are some issues that deserve attention. For example, charges, administrative fees and payment terms.

These additional costs can raise the total amount that will be paid until the financing is repaid.

To ensure a good deal, it shares the Total Effective Cost (CET) of the operation and the final debit balance. Consult, evaluate and choose knowing all the details.

Do not set resource target

Good entrepreneurs have many goals and plans for their business. Some are delayed because of a lack of resources and lie dormant until the right time.

It turns out that when the loan money falls into the checking account, these plans awaken and can divert the focus from the most urgent priorities.

That amount seems to be enough to suit everything, but it is not. To avoid this risk, make it clear what the fate of this money is.

Do not worry about formalizing the loan

No one likes formalities, much less read contract fine print. But you can not escape it if the intention is to make a safe and advantageous operation.

This step is essential to ensure that the conditions exposed at the beginning of the process have been recorded in the contract. After all, it is worth what is in the legal document.

This timing is also important to make sure you are closing business with a serious company. Be wary if the institution does not pay much attention to the drafting of the contract.

Do not update budget forecasts

After getting the loan many entrepreneurs settle in with the feeling of “problem solved” and forget that soon will come the first charge of payment.

However, if budget forecasts are not updated and the loan portion does not go into financial planning, the company is at risk of indebtedness. It may even fall into a “snowball” effect that will only be restrained by hiring an even bigger loan. Therefore, update the financial control to keep the cash balance.

This is also important in nurturing the relationship with the lender. In the future, this can contribute to your credit analysis and you can achieve much more attractive conditions.